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7a SBL Banks only looking at personal credit?

I have worked with two banks now. We are a relatively young company. We are a
current workforce of 4 but we had to lay two people off due to lack of funds
and a shift from doing ecommerce to a combination of a brick and mortar store
AND Ecommerce that has cost us a lot of upfront money. It seems that the two
banks that I have worked with so far are not really interested in using the
government backed SBL. They try and get us approved based mainly on our own
credit and when they see our credit scores they stop. Our credit is not bad
it is just not great. We have a perfect payment history over the last 3
years. It seems that they do not like to take the time to do the paper work
or they do not make as much money using the Government secured SBL? Any help
or insight would be great.
Bob

Terry Robinson | Window Shopper |
6/12/2014 - 7:32 pm

There are a few, and I stress very few, credit repair companies that have the
ability to drastically improve credit within as little as 45 days. Use
extreme due diligence in your selection. Also, most banks are not motivated
to issue the small balance credits. You must find the newer high tech firms
that use automation technology. These few and new class of lenders will look
at these smaller deals and cut the processing time by issuing funding within
weeks versus months.

Capital LookUp | Window Shopper |
6/7/2014 - 8:35 am

Its not that your banker or loan officer does not want to do the paperwork,
it is that their bank and the SBA set minimum credit score requirements
(these minimums come mostly their regulators). And, if you do not meet that
minimum they will never get your business loan request approved - no matter
what the loan officer does. So, the banker tells you to go away so that they
can work on a deal they can get done.

Your options:

1) Look for alternative loans and lenders that do not rely on your personal
credit scores in their business loan decisions. These lenders look more at
how you make money than your credit. best and quickest option.

2) You don't say how much you are seeking. But, if it is under $50,000 - you
might think about a micro loan - plenty of SBA backed lenders in your area or
state as well as local government and private programs in your community -
all that will accept credit scores around 600 FICO. Even if that is not all
that you need, it may give you something to move you forward while you work
on other financing.

3)Fix your credit - improve it. This will take time but in the long run you
should be doing this anyway so that you do not have to face this issue again.

4)Find a new partner that does have good credit to get you over this hump.

Lastly, know that you will get some advice about building business credit and
using that. However, let me tell you that very few lenders - especially banks
and SBA preferred lenders do not use business credit scores in their
underwriting. They will always pull your personal scores - period. Don't
waste your time and money.

hamtramck | Window Shopper |
6/6/2014 - 4:51 pm

BizResearcher | Window Shopper |
6/4/2014 - 11:24 am

The relatively recent age of your business will affect your loan application.
Your business has not had time to create a long credit history and therefore
your personal credit is being considered. Your personal credit shows your
approach to handling finances, how you pay your bills (on time, carry a
credit card balance each month, etc.). The longer you are in business, the
easier it will be to obtain funding in the business name.

HorizonBusinessFunding | Window Shopper |
6/2/2014 - 4:09 pm

Underwriting criteria for traditional loan programs has gotten very high, and
many large banks are just not giving out the resources for a number of
reasons including aversion to risk and a perception of lower profitability
for these loans. If you have not already, a local bank might be able to take
a more in depth look at your application, since they tend to be more
welcoming of potential economic development on the local level.